Insurers must do more than net zero to protect nature: ClimateWise

Insurers are being urged to do more at the underwriting stage to help protect the environment and bring their risk expertise to the table before, not just after, natural disasters. Launching a roadmap for insurers, industry group ClimateWise says nature-related risks are not currently assessed by insurers and reinsurers. It says the impact on nature must be taken into account when underwriting climate and nature-related risks. “The value of nature needs to be integrated into underwriting to avoid irreparable damage to the natural world. The cost of not doing so is vast and understated,” the report says. It adds that insurers have a wider role to play. “The insurance industry is built on the ability to quantify risks. Moving towards integrating nature-related risks and impacts into insurance brokerage and underwriting can be seen as a ‘natural’ evolution for the industry. The insurance industry can expand its role in society to support risk management through proactive nature-positive measures to help contribute to the protection and restoration of nature – both in advance of and in response to a disaster or loss.” The report says insurers are not proactively assessing nature-related risks because of lack of awareness and understanding, lack of data and skills, an insufficient policy environment and lack of buy-in from insurance c-suite decision-makers. Harriet James, head of sustainability strategy at RenaissanceRe and managing committee chair at ClimateWise, says: “Utilising our risk and underwriting expertise, the insurance industry is in a unique position to understand, quantify and manage nature-related financial risks and leverage existing frameworks to develop innovative product solutions that reduce biodiversity loss and ecosystem collapse. This Roadmap explores these important topics and provides key actions to support the industry in progressing a nature-positive journey.” Dr Nina Seega, director of the Centre for Sustainable Finance at Cambridge Institute for Sustainability Leadership, which convenes ClimateWise, says: “The (re)insurance industry has a vital role to play in protecting our natural world. It is uniquely placed to improve our understanding of nature-related financial risks, invest in nature-based solutions and protect natural assets. This roadmap summarises challenges the (re)insurance industry is facing today, practices that are happening now and actions that need to be taken to enable the industry to fulfil its role.” ClimateWise says the industry’s role in protecting ecosystems is ‘critical’. “There is a need to drive insurance market awareness and mainstream nature-positive considerations into insurance companies’ strategies, alongside their net zero ambitions, as well as towards policymakers and key legislation,” ClimateWise says. Ben Howarth, chief sustainability officer at the Association of British Insurers, says insurers can do more than set net-zero goals. “While the insurance and long-term savings sector has made huge strides in facing the challenges posed by climate change and reaching net zero, we cannot lose sight of the urgent need to protect the natural environment and biodiversity on which human life depends. “Climate change and biodiversity are inter-dependent and an effective sustainability strategy needs to address both.” The report urges insurers to: Develop more use cases and adapt present models in order to improve understanding and measurement of nature-related risks; Create new approaches to modelling and understand asset ownership in order to innovate in asset protection; Develop investment and insurance solutions, and prioritise major dependencies on nature to facilitate capital flows; Engage constructively with policymakers to create an enabling regulatory framework; and Support customer and client education and engagement by incentivising nature-positive behaviours.

Insurers must do more than net zero to protect nature: ClimateWise

Want to read this article?

Read Next

Munich Re reorganises P&C underwriting in Asia Pacific, Middle East & Africa

Macquarie in new binding authority agreement with Mosaic

Claims likely to increase as vessels remain stranded in Baltimore

Climate change to cause ‘massive economic damage’

Two-paced upstream energy market falls in favour of buyers

Munich Re reorganises P&C underwriting in Asia Pacific, Middle East & Africa

Macquarie in new binding authority agreement with Mosaic

Claims likely to increase as vessels remain stranded in Baltimore

Climate change to cause ‘massive economic damage’

Two-paced upstream energy market falls in favour of buyers

Want to read this article?

Read Next

Munich Re reorganises P&C underwriting in Asia Pacific, Middle East & Africa

Macquarie in new binding authority agreement with Mosaic

Claims likely to increase as vessels remain stranded in Baltimore

Climate change to cause ‘massive economic damage’

Two-paced upstream energy market falls in favour of buyers

Related Articles